Oil prices on a tear on strong economic news

NEW YORK, April 8 (UPI) -- Improving prospects for the U.S. economy and good grades for European markets help spur one of the strongest rallies of the year for crude oil prices Friday.

Moody's Investors Service said Friday the economy in Germany, a central part of the European economy, will continue to grow in 2016.

"We expect a slight acceleration of Germany's real gross domestic product growth to 1.8 percent in 2016, benefiting from robust domestic demand supported by a solid labor market and the further drop in oil prices," Thorsten Nestmann, a senior credit officer at Moody's, said in a statement.

When enduring sector weakness continued into 2016, the European Central Bank in January said inflationary pressures may pose a risk to the regional economy, though falling oil prices could lead to more disposable income for European consumers.

The profile for Germany from Moody's followed comments in New York made by U.S. Federal Reserve Chair Janet Yellen, who was quoted by Bloomberg News as saying data suggest the U.S. labor market has "vastly improved."

Crude oil prices moved up dramatically in early Friday trading, following a mixed session for Thursday. Brent moved up 4.7 percent to start the day in New York at $41.29 per barrel. West Texas Intermediate, the U.S. benchmark for the price of crude oil, was gained 5.6 percent from the previous session to open at $39.34 per barrel.

Positive pressure surfaced early this week on word that major crude oil producers would agree to hold output steady at a meeting later this month in Doha. A quarterly review from the Dallas Federal Reserve, however, said the agreement was on "thin ice" without support from Iran, which said it wouldn't budge until it regained a market share lost to economic sanctions.

"Whether an agreement is reached or not, it remains unclear if the freeze would change the supply outlook for 2016 without Iran's participation," the report read. "The other countries are unlikely to significantly boost supply in 2016 and, in several cases, appear to be currently producing at very high levels."

Latent pressure remains for the sector as a whole. In March minutes from the U.S. Federal Reserve, published earlier this week, officials said inflation was expected to improve in response to recent gains in crude oil prices.

"Beyond 2016, the forecast was a bit lower than the previous projection, primarily reflecting a flatter expected path for crude oil prices," the minutes read.